Vertex Reports Second Quarter 2023 Financial Results

— Product revenue of $2.49 billion, a 14% increase compared to Q2 2022 —

— Company raises full year 2023 product revenue guidance to $9.7 to $9.8 billion —

— FDA has accepted the exa-cel BLAs in both severe sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT); Priority Review granted for SCD with PDUFA date of December 8, 2023 —

— Pipeline continues to advance with multiple near-term clinical milestones —

BOSTON--(BUSINESS WIRE)-- Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) today reported consolidated financial results for the second quarter ended June 30, 2023 and updated its full year 2023 financial guidance.

“The second quarter of 2023 marked another period of strong progress across our business. We are reaching more patients globally with our cystic fibrosis medicines, advancing our late-stage clinical programs and making rapid progress across our research and development pipeline of transformative medicines,” said Reshma Kewalramani, M.D., Chief Executive Officer and President of Vertex. “In the second half of the year, we look forward to expanding our leadership in CF; continuing to prepare for several near-term potential launches, starting with exa-cel; and completing major Phase 3 trials including VX-548 in acute pain and the vanzacaftor triple in cystic fibrosis.”

Second Quarter 2023 Results

Product revenue increased 14% to $2.49 billion compared to the second quarter of 2022, primarily driven by the strong uptake of TRIKAFTA/KAFTRIO in multiple countries internationally and continued performance of TRIKAFTA in the U.S., including the launch in children with CF 2 to 5 years of age. Net product revenue in the second quarter of 2023 increased 7% to $1.51 billion in the U.S. and increased 26% to $985 million outside the U.S., compared to the second quarter of 2022.

Combined GAAP and Non-GAAP R&D, Acquired IPR&D and SG&A expenses were $1.2 billion and $1.0 billion, respectively, compared to $877 million and $750 million, respectively, in the second quarter of 2022. The increases were due to increased investment in support of multiple programs that have advanced in mid- and late-stage clinical development, increased acquired IPR&D expenses, and the costs to support launches of Vertex's therapies globally.

GAAP effective tax rate was 21.2% compared to 20.9% for the second quarter of 2022.

Non-GAAP effective tax rate was 21.0% compared to 21.8% for the second quarter of 2022. Please refer to Note 1 for further details on our GAAP to Non-GAAP tax adjustments.

GAAP and Non-GAAP net income increased by 13% and 9%, respectively, compared to the second quarter of 2022, primarily driven by strong revenue growth and increased interest income partially offset by increased investment in our mid- and late-stage clinical pipeline, increased acquired IPR&D expenses, and the costs to support launches of Vertex’s therapies globally.

Cash, cash equivalents and total marketable securities as of June 30, 2023 were $12.6 billion, compared to $10.9 billion as of December 31, 2022. The increase was primarily driven by strong revenue growth and operating cash flow, partially offset by our payments to Entrada Therapeutics, CRISPR Therapeutics and other collaboration partners, repurchases of our common stock pursuant to our share repurchase program, and income tax payments.

Full Year 2023 Financial Guidance

Vertex is raising its full year 2023 CF product revenue guidance to $9.7 to $9.8 billion, from $9.55 to $9.7 billion previously. The increase reflects the expected full-year impact of the strong uptake of TRIKAFTA/KAFTRIO in multiple countries internationally and continued performance of TRIKAFTA in the U.S. This guidance includes an approximately 150-basis-point negative impact from changes in foreign currency rates, inclusive of our foreign exchange risk management program. Vertex is also increasing full year 2023 combined GAAP and non-GAAP R&D, Acquired IPR&D and SG&A expense guidance. The increase accounts for higher acquired IPR&D expenses incurred year-to-date, including a $70 million milestone payment to CRISPR Therapeutics.

Vertex’s financial guidance is summarized below:

Key Business Highlights

Cystic Fibrosis (CF) Marketed Products

Vertex anticipates the number of CF patients taking our medicines will continue to grow, including through new approvals and reimbursement for the treatment of younger patients. Recent progress includes:

• Approval from the European Commission for the use of ORKAMBI in children with CF ages 1 to